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Casa Media, fined 1.8 million lei for abusive practices on the advertising market: We challenged the decision in court

11 September 2020
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The Competition Council (CC) fined the advertising sales company Casa Media, affiliated with the former democratic leader Vlad Plahotniuc, 1.8 million lei, for having allowed actions that disadvantaged several television stations and advertising providers. The investigation, which took over two years, started after a notification filed by four stations that complained of unfair competition on the advertising market. The representatives of Casa Media say that they challenged the CC’s decision in court.

The complaint of the stations RTR Moldova, Pro TV Chisinau, Jurnal TV, and TV8 was filed on January 19, 2018. Their representatives invoked an alleged cartel agreement between the advertising houses Casa Media Corp and Exclusiv Sales House, which had allegedly concluded an agreement proposing very large discounts to advertising providers. Instead, the companies had to allocate 100% of their advertising budgets exclusively to the television stations that partnered with the two sales houses. Casa Media, whose sole shareholder is Dorin Pavelescu, an intermediary in Plahotniuc’s entourage, according to mold-street.com, sold advertising for some stations affiliated with the former Democratic Party leader, while Exclusiv Sales House, founded by Exclusiv Media, which belongs to the Socialist MP Corneliu Furculita, offered advertising to those who had connections with the socialists. Media Azi previously wrote that customers were offered discounts of up to 44%, and the total amount that a company allocated to advertising was divided between the two houses in proportion of 80% (Casa Media) and 20% (Exclusiv Sales House).

“THERE IS NO EVIDENCE OF AN ANTI-COMPETITION AGREEMENT”

Following investigations, the Competition Council claims that it has not identified sufficient evidence to demonstrate an alleged agreement to share the advertising market. In its replies to CC, Casa Media mentioned that there are no written or verbal agreements with Exclusiv Sales House, and the contracts concluded between the company and suppliers or advertising agencies “do not contain clauses referring to additional discounts and/or other conditions regarding the placement of advertising in a certain ratio by the two sales houses present on the market and giving up the placement of advertising on other television stations.” In its turn, Exclusiv Sales House says that it “does not participate in joint discussions on the advertising budget with any of the market participants, especially regarding determined (fixed) shares.”

“FORCED CUSTOMER LOYALTY”

However, the CC found that the company Casa Media Corp was the only one that held, between 2017 and the first half of 2019, a dominant position on the market. Specifically, the company approached advertising providers differently when it granted discounts and surcharges on the purchase of advertising space. Following the investigation, the CC found that the company, through its actions, disadvantaged some television stations and advertising providers in terms of competition. The authority also found that, by offering individualized discounts for placing 80%-100% of the total advertising demand on its television stations, Casa Media Corp “generated forced loyalty of advertising providers.”
Earlier, the CC Chairman Marcel Raducanu told Media Azi that it was a “difficult case, never before seen in the Republic of Moldova.” “The investigation will continue until we get a nice case, not one at someone’s command, of which we are accused,” Raducanu argued in July 2019.

CASA MEDIA: “A CLEAR SCENARIO OF ANTI-COMPETITION PRACTICE”

Casa Media says it does not agree with the CC’s conclusions and challenged the decision in court on September 10, 2020, in an administrative litigation procedure. According to an official reaction from the company, the report contains several ambiguities. “At the same time, we draw everyone’s attention to a contradictory, but also ‘ironic’, moment – following the investigation, the Competition Council found a clear evidence of cartel agreement between the complainants, namely ‘annexes to contract, which provide that advertising will be placed only on television stations managed by the complainants’ – a fact which we also communicated both during the investigation and during the hearings, where, in fact, we were the only ones present (the other parties did not show any interest in hearings),” the Casa Media press release says.

According to Casa Media, the authority was manipulated “by political pressure and media attacks.” The company argues its position by the fact that initially, in January 2018, an investigation appeared on the subject, after which the complaint was submitted to the CC.

They also mention several letters which the complainants had sent to the majority of customers, asking them not to sign contracts with the respective sales house, but also the “motivation and persuasion” of customers to place advertising only on stations managed by to the petitioners. “So, a clear scenario of aggressive concerted anti-competitive practice, maintained by destructive prices and other instruments, so a cartel agreement during 2018, clearly involving the signatories of the complaint to the Competition Council of January 19, 2018,” the document said.

“This investigation began under pressure, with a clear purpose that developed over time, as evidenced by the fact that the result of the investigation itself is not of interest to anyone, not even to the complainants,” according to Casa Media.